If you run a small or mid-sized business, there is a good chance your cyber insurance application has gotten more complicated over the past few years. Carriers are no longer satisfied with a simple checkbox confirming you have antivirus software installed. They want proof that your employees know how to spot threats, respond to incidents, and follow security best practices every single day. Security awareness training has moved from a nice-to-have to a hard requirement, and understanding exactly what insurers expect can save you thousands of dollars in premiums, or prevent a denied claim when you need coverage the most.

The Growing Role of Cyber Insurance

Cyberattacks against small businesses have increased dramatically, and insurers have taken notice. Ransomware, business email compromise, and phishing attacks now account for the majority of claims filed by companies with fewer than 250 employees. As claims have risen, so have premiums. Many small business owners have seen renewal costs jump by 30 to 60 percent in a single year, with some carriers declining to renew policies altogether for businesses that cannot demonstrate adequate security controls.

This shift has made cyber insurance both more expensive and more difficult to obtain. Carriers are asking detailed questions about your security posture during the application process, and employee training sits near the top of that list. The logic is straightforward: human error is the leading cause of data breaches, and a well-trained workforce is one of the most effective defenses against social engineering attacks. If you are preparing to apply for coverage or renew an existing policy, you should know exactly what underwriters are looking for. Our cyber insurance application checklist breaks down the full list of requirements you are likely to encounter.

What Insurers Look For in Training Programs

Not all training programs are created equal in the eyes of an underwriter. Simply sending your team a PDF about password hygiene once a year will not satisfy most carriers. Here are the core elements insurers evaluate when reviewing your training program:

  • Regular training frequency. Insurers want to see that training happens on a recurring basis, not as a one-time event. Most carriers expect at least annual training, though quarterly or monthly sessions are viewed much more favorably. Short, frequent lessons are more effective than a single marathon session, and underwriters know this.
  • Phishing simulations. Running simulated phishing campaigns shows that your organization is actively testing employee awareness, not just lecturing about it. Carriers want to see that you send test phishing emails, track who clicks, and provide immediate feedback and remediation to employees who fall for the simulation.
  • Completion tracking. It is not enough to offer training. You need to prove that employees actually complete it. Insurers look for systems that track completion rates, quiz scores, and participation across your entire workforce. If only half your team finishes the training, an underwriter may view that as a gap in your security posture.
  • Evidence and reporting. Documentation is everything. Carriers may request training completion reports, phishing simulation results, and records of remedial training for employees who failed assessments. Having a platform that generates these reports automatically makes the application and renewal process significantly smoother.

Common Training Requirements Across Carriers

While every insurance provider has its own underwriting criteria, certain training requirements appear consistently across the industry. If your program covers these areas, you will be well positioned for most applications:

  1. Annual security awareness training at minimum. Every employee, from the front desk to the C-suite, should complete security awareness training at least once per year. Many carriers now prefer quarterly training cycles because shorter, more frequent sessions lead to better retention and fewer incidents.
  2. Phishing awareness and testing. Employees need to understand how phishing emails work, what red flags to look for, and what to do when they receive a suspicious message. Regular phishing simulations validate that this knowledge translates into real-world behavior.
  3. Incident reporting procedures. Your team should know exactly how to report a suspected security incident. Carriers want to see that employees have clear instructions for escalating potential threats, whether that means contacting IT, using a dedicated reporting tool, or following a written incident response plan.
  4. Password policies and best practices. Training should cover the importance of strong, unique passwords, the dangers of password reuse, and how to use a password manager. Some carriers specifically ask whether your organization enforces password complexity requirements and regular rotation.
  5. Multi-factor authentication adoption. MFA is one of the most commonly required controls on cyber insurance applications. Training should explain what MFA is, why it matters, and how employees should set it up on their work accounts. Carriers want to see high adoption rates across your organization, and that starts with educating your team on why MFA is non-negotiable.

How Training Affects Your Premiums

One of the most tangible benefits of a strong training program is its impact on your insurance costs. Carriers use your security posture to calculate risk, and documented training directly reduces your perceived risk profile. Businesses that can demonstrate consistent, tracked training with phishing simulations often qualify for lower premiums compared to organizations that cannot provide this evidence.

The savings can be substantial. Some insurers offer premium discounts of 5 to 15 percent for businesses that meet or exceed their training benchmarks. Over the life of a policy, that adds up quickly, especially as base premiums continue to rise across the industry. For a deeper look at how these savings work, our article on the ROI of cybersecurity awareness training walks through the numbers in detail.

On the other side of the equation, a lack of training can lead to significantly higher premiums. If your application reveals that employees have not completed any formal security training, underwriters may quote you a higher rate to account for the increased risk, or they may decline to offer coverage entirely.

What Happens If You Don't Train Your Team

The consequences of skipping training go beyond higher premiums. When a breach occurs and you file a claim, your carrier will investigate the circumstances. If they determine that the incident resulted from a lack of employee training, or that your organization failed to meet the training requirements outlined in your policy, the outcome can be severe:

  • Claim denials. If your policy requires annual security awareness training and you cannot provide documentation proving your team completed it, the carrier may deny your claim. This leaves you responsible for the full cost of the breach, including legal fees, notification expenses, regulatory fines, and business interruption losses.
  • Policy cancellation. Some carriers conduct mid-term audits or request updated compliance documentation during the policy period. If you cannot demonstrate that your training program is active and up to date, the carrier may cancel your policy before it expires, leaving you without coverage.
  • Higher renewal costs. Even if a claim is not filed, failing to maintain your training program can result in significantly higher costs at renewal time. Carriers track policyholder compliance, and a lapse in training signals increased risk that will be reflected in your next quote.
The time to build your training program is before you need to file a claim, not after. Insurers reward preparation and penalize negligence.

How to Build a Training Program Insurers Love

Building a training program that satisfies your carrier does not have to be complicated or expensive. The key is to focus on consistency, documentation, and measurable outcomes. Here is a practical framework you can follow:

Choose the Right Platform

Select a training platform that is designed for small businesses and covers the topics insurers care about most. Look for a solution that includes pre-built courses on phishing, password security, social engineering, incident reporting, and data handling. The platform should also support automated phishing simulations and provide completion tracking out of the box. Avoid platforms built for enterprise-scale organizations that come with complex setup processes and pricing that does not make sense for a 10 or 50-person team.

Document Everything

Your training platform should generate reports that you can hand directly to your insurance broker or underwriter. These reports should show which employees completed training, when they completed it, what their quiz scores were, and how they performed on phishing simulations. If your current system does not produce these reports automatically, you will spend hours compiling the data manually every time your carrier asks for it.

Run Phishing Simulations Regularly

Phishing simulations should run at least once per quarter, and ideally once per month. Vary the scenarios to reflect current real-world threats. Track click rates over time and use the results to identify employees who need additional coaching. Carriers want to see a trend of improvement. A declining click rate over several quarters is strong evidence that your program is working.

Review and Update Quarterly

Threats evolve quickly, and your training should keep pace. Review your program at least once per quarter to make sure the content is current and relevant. Update your phishing simulation templates to reflect the latest attack techniques. Use quarterly reviews as an opportunity to address any gaps in completion rates and to reinforce key topics with your team.

The Bottom Line

Cyber insurance is no longer optional for most small businesses, and the training requirements that come with it are only getting stricter. Carriers expect to see a documented, consistent, and measurable training program that covers phishing awareness, incident reporting, password security, and MFA adoption. Meeting these expectations protects your ability to obtain coverage, lowers your premiums, and ensures your claims will be honored when you need them most.

The good news is that building a compliant training program does not require a large IT department or a massive budget. Platforms like CyberLearningHub are designed specifically for small businesses, providing short monthly training modules, automated phishing simulations, and insurer-ready compliance reports in a single, affordable package. The investment is small compared to the cost of a denied claim or a cancelled policy.

Start by assessing where your current training program stands, identify the gaps, and put a plan in place before your next renewal. Your insurer will notice, your premiums will reflect it, and your team will be better prepared to defend your business against the threats that matter most.